Congress Reaches Out to President to Help ESOPs

More than 20 members of Congress signed a letter addressed to President Trump earlier this month requesting assistance in protecting employee-owned companies from the Department of Labor (“DOL”).  The letter argues that the DOL has issued very little guidance on important issues governing Employee Stock Ownership Plans (“ESOPs”), including the valuation of shares owned by the ESOP. This has led to inconsistent positions by the DOL on legal issues and aggressive enforcement policies.  In some instances, the DOL has threatened to sue companies over their ESOP valuation unless they terminate the ESOP.  DOL investigations can place a significant burden on small ESOP companies, sometimes hindering their ability to obtain financing, or causing them to terminate their ESOP.  At the very least, there is concern that the DOL’s enforcement policies could make it difficult for ESOP companies to make business decisions and/or to find someone willing to be their plan fiduciary.

The writers of the letter assert that ESOPs are a great mechanism to help private companies succeed, citing studies showing that ESOP companies have higher survival rates, lower layoffs and better performance compared to non-ESOP companies.  Therefore, in order to support the growth of small businesses, the letter requests that President Trump work to persuade the DOL to clarify the rules governing ESOPs (related to valuation and other relevant issues), and to improve the DOL’s enforcement practices in order to reduce the burden placed on small businesses.

Schneider Downs has significant experience assisting clients with various ESOP-related needs, including audit, tax, plan design and administration. For more information, please contact Jason Lumpkin (412.697.5472; jlumpkin@sdcpa.com) of our Employee Benefits Group.  Schneider Downs also has significant experience providing business valuation services.  For more information, please contact Joel Rosenthal (412.697.5387; jrosenthal@sdcpa.com) or Steve Thimons (412.697.5281; sthimons@sdcpa.com) of our Business Advisory Group.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

Cybersecurity & Employee Benefit Plans
SECURE Act vs. RESA
Fraud and Corruption Seminar Review
What is Liam Neeson’s Name Worth?
Slow Start in 2019 for Mergers and Acquisitions
2019 Private Capital Markets Report

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office
Pittsburgh

One PPG Place, Suite 1700
Pittsburgh, PA 15222

contactsd@schneiderdowns.com
p:412.261.3644     f:412.261.4876

Map of Columbus Office
Columbus

65 East State Street, Suite 2000
Columbus, OH 43215

contactsd@schneiderdowns.com
p:614.621.4060     f:614.621.4062